We are told houses are not over-priced. So how come they are unaffordable?

Smart Money: the three key insights from the latest Central Bank report on affordability and house prices

A combination of Central Bank borrowing limits and cash in the market are limiting would-be buyers’ options. Photograph: iStock

A combination of Central Bank borrowing limits and cash in the market are limiting would-be buyers’ options. Photograph: iStock

House prices may now be fully valued in comparison to incomes, according to the latest analysis by the Central Bank, but still “may not be affordable to a significant proportion of the population”. And so we are faced with the problem that a market in balance may still price many people out of buying in Dublin completely.

The bank, charged with ensuring financial stability, made clear this week that it not going to adjust its mortgage rules to allow borrowers to pay more by taking out larger loans. Its latest review of the market sheds new light on the affordability crisis. It shows how more and more are hitting the affordability barrier,particularly in Dublin and how cash is still king in many areas of the market. Two groups are being heavily squeezed – aspirant first-time buyers in the big cities, many now completely pushed out and those who bought at the height of the last boom and can’t now afford to move.

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